At the beginning of 1937 the Chinese Government was still negotiating for a readjustment of certain foreign debts in arrears. In April, the London Bondholders' Committee, constituted to deal with such questions, recommended the acceptance of terms for a settlement of the Hukuang Railways Loan similar to those already adopted in readjustment of the Tientsin-Pukow Railway Loans. Two United States dollar loans were also put on a new basis, namely the Chi-cage Bank Loan and the Pacific Development Corporation Loan, both dating from 1919. Furthermore, the good work of settling up certain long outstanding advances and material debts to government departments proceeded satisfactorily.
The conclusion of agreements regarding the Chinese Government loans in default and the improved outlook in China to which I have already referred, had a favourable effect on Chinese bonds quoted on the London Stock Exchange and it was thought, early in the year, that it might shortly be possible to bridge the hiatus i. the London issues of Chinese loans which had existed since the Reorganization Loan of 1913.
The Minister of Railways first initiated discussions regarding the possible flotation of loans for new railway construction in China. Subsequently, when Dr. Kung was in London for the Coronation ceremonies, negotiations for the building of a railway from Canton across Kwangtung to Meihsien made progress. At the same time Dr. Kung also broached the subject ai a loan to be used partly to provide additional assistance in the stabilization of the Chinese currency and partly for the refunding of a portion ofthe domestic debt. We were consulted about this matter but no agreement was reached. We were, and are, bound by the agreement of 1920 between the International Consortium Group of banks, so we naturally sought the views of the other groups in regard to both these projects. They of course had to be left in abeyance when the Sino-Japanese conflict commenced.
Text read from the printed page and cleaned; old type leaves the occasional error.